Federal Agricultural Mortgage Corporation (AGM) Earnings Call Transcript & Summary

All right. I think we're going to get started. Okay. Great. Well, good morning, everyone. I'm Jalpa Nazareth, and I am super excited to kick off Farmer Mac's first ever Investor Day event. So the presentation we're going to show you today is available on our website, and we're planning to post the entire event after it concludes. I want to quickly remind you, as we always do, we -- our presentation will contain forward-looking statements, which are based on management's current expectations and assumptions. We will also be presenting certain non-GAAP financial measures. Reconciliations of these financial measures will be found in our most recent filings. We have a great agenda planned for you today. First, you're going to be hearing an overview of Farmer Mac from our CEO, Brad Nordholm followed by a review of our business and credit from our Chief Business Officer, Zack Carpenter; and our Chief Credit Officer, Marc Crady. We'll have a short break around 11, after which Todd Batta, our VP of Government Affairs, is going to provide a review of our public charter. Lastly, Aparna Ramesh, our CFO, will present a financial roadmap followed by a 30-minute Q&A with the management team. Now we're going to be taking questions in person as well as from all the users on the webcast. So at this time, I'd like to turn it over to Brad Nordholm.

Thank you, Jalpa. And let me offer my welcome to everyone. It's really nice to see you here. I appreciate you coming out. And for those who are tuning in by video, welcome to you as well. This -- as Jalpa said, this is a big day for Farmer Mac. We are celebrating the 25th anniversary of our New York Stock Exchange listing. Over the last 3 days, we have had our quarterly Board meetings here. We had our Annual Shareholder Meeting at 8 o'clock this morning, at which time we announced the election of 2 new directors to the Farmer Mac Board. And at the conclusion of that, we got to go downstairs and ring the bell. And ringing the bell is something that is fun to get to be on TV and all that. But for Farmer Mac, it is much more than that right now. You may have noticed that we're beginning to roll out some new branding of Farmer Mac. And we are determined to tell the breadth of our businesses, the stability of our business model, the strength of our mission and the success, frankly, of our employees and our financial performance in a more compelling way. And at the back of the room, Lisa Myers has been leading that initiative. The opening bell in New York Stock Exchange today was a prime opportunity to do that. We had a couple of interviews afterwards. There are going to be feeds and opportunities to use that. A new video we have was looping on the floor. It was right behind Kramer, all of which is good. And we think as more people become aware of the Farmer Mac story, it will be very good for Farmer Mac. It will be good for investors. And ultimately, just lead to additional success, success playing on success. I want to tell you a little bit about the Farmer Mac story. But let me begin with just a couple of financial highlights. We are a company that has delivered top decile total shareholder return performance the last 1 year, the last 3 years, the last 5 years, the last 10 years. We have had 13 consecutive years of dividend growth. All through that period of time, we've had about 1/4 the volatility in net earnings as measured by standard deviation of any of our index financial peers on the New York Stock Exchange. We have never had a losing year. So why is that? What is it about the Farmer Mac business model and about what we're doing that delivers financial results, I'd challenge you to find someone who operates with a stronger CAGR and lower risk and lower volatility than Farmer Mac. What is it about Farmer Mac that enables us to deliver those results? And that's what I'm going to try to tell you. We're also an organization that -- at the core of that story is a government-sponsored, congressionally chartered GSE, government-sponsored entity that enjoys extraordinary advantages in funding and in charter that enables us to deliver those above-average return levels. And very importantly, because of our funding strategies, enables us to deliver that with lower risk than just bought anyone to find. So I'm going to be talking about that as well. So a bit on mission. What does it mean to be a congressional charter, a government-sponsored entity with a mission? It really at Farmer Mac comes down to a mission to increase the accessibility of credit for rural America. That is why we are here. That is why we have a congressional charter. If we do that well, it means that we lower the cost of borrowing to borrowers. I'll talk about our 4 business segments, farmers, ranchers, agri businesses, rural utilities and project finance rural utility, renewable energy. It enables us to issue bonds across the curve and access the debt capital markets in other ways including new securitization initiatives underway. But it also enables us to align our internal values around how we work, the people we hire with a passion for our mission and expertise in finance and operations in underwriting and understanding American agricultural -- rural America and all that goes with that. So some people would challenge me and say, well, oftentimes mission-driven is an excuse for average performance, an excuse for not doing the best you can do, an excuse for not driving the business forward as aggressively as possible and it's prudent under the circumstances. I don't think that's the case. Our employees who do have this passion for mission, who do have this expertise, who do have this focus on a very interesting and unique niche, and who are able to really capitalize on some of these inherent advantages that we have as a GSE. They're all shareholders at Farmer Mac. Having strong financial performance, having a commitment to mission and having strong steady growth and financial results are not intentional one another. For a well-managed organization that gets these objectives, clearly stated and attracts people who want to execute on that. It really is, I've said in a couple of situations before, it really is what supercharges our performance. So how did Farmer Mac come about? You really have to go back to the mid-80s when in the United States of America, we had a very significant crisis in American agriculture. That crisis was really caused by a couple of factors coming together, a very high variable interest rates of the early '80s, Paul Volcker wrung out inflation, but it's a cost of short-term rates in the teens, you'll recall. The fact that most agricultural borrowers were borrowing variable rate because their financial institutions did not avail themselves to the asset liability management practices to offer fixed rate product. So rapidly increasing operating costs for many farmers and ranches across the U.S. and plummeting commodity prices, some of which can be traced all the way back to the grain export embargoes during the Carter administration. And that double whammy really caught up with American agriculture in the mid-80s and resulted in the failure of many American farms, bankruptcies. Some of you may be old enough to remember, Willie Nelson and Farm Aid going back to how can we help and support American agriculture more. It resulted in agricultural financial institutions failing. The farm credit system required a federal bailout. Commercial banks were focused on agriculture, had many financial problems and some failures. And in that environment, very well meeting people, from across the political spectrum in Washington, D.C. said, we need to create another source of liquidity for rural America and American agriculture. And that was Farmer Mac. Let's create an organization that operates a little bit like Fannie Mae and Freddie Mac that can take agricultural loans, guarantee them, support securitizations in the market, and fast forward a few years, also borrow long term and do on balance sheet funding of the purchase of those loans. By doing so, let us bring more fixed-rate lending product into the market and let's create more liquidity for lenders, commercial banks, farm credit banks and others, create more liquidity so that they can do more to serve rural America. We've had a couple of charter modifications since the original charter resulting from the '87 legislation that was put in place in '88, one gave us the ability to do direct loan purchases and other gave us the ability to in 2008 to purchase credit associated with rural eletric cooperatives, generating transmission electrical cooperatives and energy projects otherwise qualified for our U.S. rural utility service financing. So fast forward, those very early years, it took Farmer Mac a while to get started, but the growth started accelerating as we approached year 2000, has been accelerating ever since. Today, starting from nothing, we're a financial institution with about $30 billion of assets under management. So what does it mean to be a secondary market? What is this operating model? When we talk about purchasing loans, we are purchasing loans from -- and sometimes that partnership at inception, sometimes after the fact, but we purchase those loans from upwards of 1,000 financial institutions, whether it is local commercial banks, farm credit banks, some credit unions, specialty finance companies, making loans to farmers with the understanding and in many -- most cases, forward commitment from Farmer Mac to purchase those. We always do the underwriting and a lot of those are table funded. It means in partnership with commercial banks and farm credit banks that are servicing agri businesses in partnership with large specialized financial institutions, providing credit to rural infrastructure. Regardless of the sector, we are working with a network of up to 2,000 financial institutions to underwrite the loans that they are doing to these sectors, to buy those loans from them, in most cases, table funded, to give them back cash liquidity so that they can do it again. And we are, and this is very important, we are doing 2 types of funding. We're taking down credit that we issue in the debt capital markets as a government-sponsored entity, discounted notes, medium-term notes, bonds at minimal spreads to U.S. treasury. We can issue out to 30 years. This is something banks don't do. We're not a depository. Our funding is structured to match the assets that we're purchasing from that financial institution. That is why you see such stability and such forward visibility in our earnings at Farmer Mac. We're very disciplined about it, and we have access to debt capital markets that are the envy of almost all financial institutions. We do a second thing, and that is securitization of those same types of loans. Something they were doing. It's a way for us to diversify our funding, but we'll get to it a little bit later. It's also a way for us to grow our market, to grow market share. And when we securitize loans, we may provide a guarantee of a senior 90% to 95%. The junior position is being sold to third-party entities, completely moved away. We're eliminating all kinds of risk when we do that from credit risk to interest rate risk to basis risk on refunding and other things, and it's a growing area for us. But the bottom line is our ability to manage the inherent risk in matching assets and liabilities is exceptional. We're going to be talking today. First, I'll introduce Zack and Marc will be talking further about it, about 4 important business segments at Farmer Mac. I'm going to talk about just Farm & Ranch, which is part of our focus on American agriculture, Rural Utilities is the other part, Rural Infrastructure is the other part. But Farm & Ranch in the agriculture mortgage market are the biggest part of our assets under management today. They are driving the first securitizations that we're doing. And so what is this market and what's the size of it. American agriculture, arable land, land planted with permanent crops, force, American agriculture is an unlevered sector. Only about 27% of American farms, for example, have any mortgage. You'd never find that in commercial real estate. You not find that in housing, but only about 27% have mortgages. And those that do have mortgages that are conservative, sometimes starting out 50%, 60%, 70%, but on an average, maybe 40%, 45% after a little bit of seasoning. Why is that? Well, if Farmer Mac for one, we don't just lend against value. We lend against cash flow. And so when we go through that disciplined lending against cash flow and many of the others in the sector do as well, it keeps that loan to value that initial loan-to-value down in a competitive market environment. You put it together that low number of farms that are encumbered with mortgages and the relatively low loan-to-value on the mortgages that are out there. And in aggregate, you haven't absolutely minimal 10% loan to -- debt-to-asset value against mortgages in the sector. So who are the people who are doing this lending? Who are our customers? Who are our competitors? How do we get our business? If there are $350 billion of mortgage loans out there to American farmers and ranchers, some is coming from the farm credit system, congressionally charted as well, but a very much larger but much more of a regional patchwork of institutions. Some of them look very large and strong in comparison to Farmer Mac, some very small compared to Farmer Mac, but they're active in the sector. We compete with them, but in many cases, they are also our customers. We'll provide long-term standby purchase commitments to buy loans from them under certain situations, typically, if they become capital constrained or if there's a credit issue. There are other nonfarm credit system lenders out there. The market is about 50-50 farm credit and nonfarm credit, and they include insurance companies, agriculture banks, those are commercial banks that are classified as agricultural banks because of the concentration of agriculture business that they have and nonbank lenders. And those nonbank lenders include specialty finance companies that may be backed by private equity, may be backed by global agricultural commodity companies and others. They are all part of the competitive landscape, which provides opportunity for business development and that also competes with us. So when we put this together, we really have an opportunity and have demonstrated, I think, exceptionally stable, consistent business growth over the really more than the last decade. And if you go back even longer, 20 years, you'll see just a continuation of the same pattern. About 14% CAGR is measured over a 10-year period of time. And you may wonder, well, is that coming because of margin expansion? Or is it becoming because of growth? Well, those of you who have been looking at us in the last 2 years have seen there's been a little bit of margin expansion about 10%, 15%. That's true. And we believe that while that margin expansion will slow and maybe contract a little bit in the next year, as you saw in the first quarter, it's not going to contract or revert to where it was 4 or 5 years ago because we are more opportunistic in how we price our product, and we have a growing diversification of our segments of business, which include segments of business which are more accretive, which have higher inherent net margins. So you look at this and say, well, is that because of margin expansion? No, that's not the story. The real story here is organic growth and what Farmer Mac does to fulfill mission of bringing purchased loans through and other loan products from this large network of lenders that we have. And I might just add it through a Fed funds line up there, just to demonstrate that our growth is not highly interest rate-sensitive. During periods of rapid increase or rapid decrease, we're able to just keep growing. So just a little bit more on these market segments before I turn to Zack and Marc to provide with some case studies and really explain how it is that we develop the business. Just in summary, if we look at Farm & Ranch, these first mortgage loans that we purchased, why is it that we are able to generate this business? First of all, we offer very, very competitive pricing and efficient process. By efficient process, I mean, we put our systems out in those financial institutions so that the data necessary to originate a loan can be imported for our analysis, approval, commitment and closing. We have opportunities to accelerate that, and I'll comment on that. We have interest rate environments, which accelerate the opportunity for new Farm & Ranch business. Now the last couple of years has been down a bit because refinancing has been off and borrowers have been concerned about operating a higher interest rate environment. But now that's stabilizing, we're starting to see a turnaround in that. And it also drives wholesale finance opportunity. We will make loans to financial institutions, wholesale loans, secured by pools of their Farm & Ranch loans on over-collateralized basis. They may want to keep the interest rate risk, the margin on their balance sheet. That's fine as long as we're well collateralized and can do it on a wholesale basis. And because of the credit requirements we're doing that, that too is profitable business for us. In corporate agri business, which is newer to Farmer Mac in the last 4 years, it really comes down to having first-class bankers. The people who drive the underwriting, the origination, the servicing of Farm & Ranch of corporate agri business, of rural electric cooperatives, of renewable energy are different. They are specialists who understand the ins and outs of those unique business segments. Corporate agri business, you won't be surprised to hear. These are very experienced bankers who come from places like JPMorgan Chase and from places like [indiscernible] Bank and other of the top name corporate agro business, AgriFinance lenders in the United States because it is specialized. And as they bring to bear their relationships with other financial institutions and demonstrate that Farmer Mac can execute in doing this business, we see more and more opportunity. In fact, next Monday and Tuesday in Washington, D.C., Zack will be hosting our first ever Agricultural Finance Forum, where we'll bring together 60 of the leading commercial bank agrobusiness lenders, farm credit system lenders. And really, solidifying -- helping solidify our reputation with them that we are now in the same echelon as they are capable of executing every bit as well as they can. And we see that as an opportunity to drive more business. If we think about rural infrastructure and finance, what is it about these segments where we have advantage, what it really tells is certainly a competitive price. And that again goes back to our funding and the fact that we operate Farmer Mac on what we call an efficiency ratio, keeping our expenses at less than about 30 basis points are relative to our margin, growth opportunities with broadband investment and increasing demand for rural electricity. And then renewable energy. This is a newer market segment in the last 3 years. You look at our numbers, we have doubled our outstandings each of the last 3 years. The addressable market is huge relative to Farmer Mac. The inherent credit needs our long-term amortizing fixed rate financing, bingo, there is a competitive advantage for Farmer Mac. The credit metrics are roughly BB+, BBB- metrics, right on spot for Farmer Mac and the way we operate our company and the way we manage credit risk. So many inherited advantages and this is an area where you are seeing not just strong demand for new investment in renewable energy projects due to the Inflation Reduction Act, but also because of the plummeting cost of those technologies relative to traditional technologies. So a big opportunity for us. So what are some of the opportunities for further growth at Farmer Mac? We think we have a lot. And I would just note that I arrived at Farmer Mac about 5 years ago. A large portion of our management team, Chief Business Officer, a newly created position; Chief Financial Officer; and many others in leadership have been assembled in the last 5 years, most of them 4 years ago. And I would note that when I came to Farmer Mac, I saw a very stable, very strong, very advantaged company, but a company that could do more. I can elaborate on that, but that was my vision. And so when we hired a Chief Business Officer, when we hired a CFO, is we've hired many other senior executives across Farmer Mac, who you're going to be hearing -- some of whom you will be hearing from today. They came here because of that shared interest, that shared vision of driving more growth and innovation at Farmer Mac. I want to be crystal clear about it. That's why they're here. And that's why we have so much confidence in the growth opportunities that we have identified. We feel in many respects, we've now built a platform. We've really staffed up these 4 segments. We are improving our technology platform with Sean Datcher's leadership. We're really ready for more growth. And so what are those opportunities? I've enumerated some of them here. They range from technology innovation in the lower left around collateral value efficiencies. Doing appraisals is one of the real sources of friction in the agriculture mortgage business. It takes too long, way too long. And yet we have tens of thousands of data points on loans in every 1 of the 50 states in the United States, how do we start using that to come up with value estimates that can be substituted and may be better than the old-fashioned manual appraisal process. Next up, title insurance, how can we take the friction out of title insurance process? How can we collapse the time it takes to underwrite and close a loan for those financial institutions, advantage them and their relationships with their customers, advantage us and a go-to source of funding. How can we do that using data and technology. Around each of the other opportunities, we've developed new capabilities, for example, pool purchases and loan servicing. We've been doing securitization stuff for a couple of years. We recently announced that we had done some pooled purchases from a large financial institution. We are able now to bring in pools with hundreds and hundreds of transactions, and we're able to slice and dice that data to value it properly upfront and then to administer it after the fact. That becomes a competitive advantage in forging new relationships with new types of financial solutions that want liquidity, not just on a loan-by-loan basis, but because they want to exit a business or they want to change the business or focus on something new. So I'm not going to elaborate on all of them. But suffice it to say that at Farmer Mac, we see growth opportunity and are really excited about it. So let me just conclude by kind of rewinding to where I started, and that is we have demonstrated years, decades, really, a very, very consistent growth. Growth with less volatility in earnings and more consistent in the high mid-teens CAGR in terms of revenue and profits, then I think any -- I challenge you to find a financial institution that matches it. We've done so because of our inherent advantages as a GSE in funding. We've done so because of highly aligned and motivated, mission-driven employees, many of whom come from rural America who find Farmer Mac to be the place where they want to just work like crazy and accomplish all kinds of great things and support a mission. And we've done it because of crystal clear kind of focus on our strategic alignment and what we want to do. So I want to really turn the mic and the podium to Zack and Marc so that they can tell you with a greater attention to detail about exactly how we're going about this. And you can get a sense for who our customers really are and what drives them to Farmer Mac and what our competitive advantages are and our underwriting issues and doing business with them.

Well, great. Thank you, Brad. Good morning, everyone. I'm really excited to be here. I think Brad did a tremendous job setting the stage for talking about our business portfolios, the growth opportunities we have and where we see we could take this in the future. So really, our goal today is, I'd say, highlight in more detail our portfolios. We talk about a few key points for each initiative. So our role is a secondary market. What does that mean? And how do we differentiate ourselves using that? Who do we support? Who are our customers? And how do we support them? More importantly, what are the key business drivers for these portfolios and helping drive us -- drive our growth in the future? And how does Farmer Mac differentiate itself with our customers in these transactions? In addition, for each portfolio, we're going to highlight a case study, and this is a real-life example of a transaction we purchased from one of our customers. And so our goal here is to highlight who the customer is, what their borrower need was, and how Farmer Mac resonated as a capital source to support our customer. Marc Crady, my colleague, our Chief Credit Officer, will join me and talk about, well, what are the credit considerations, how do we assess risk, and how do you ultimately make the right decision for our mission, our customer in Farmer Mac. So let's talk about Farm & Ranch. And as Brad mentioned, a key foundational business in our agricultural line of business. So our focus here is to provide innovative financial solutions to our customers. Our customers happen to be a network of financial institutions that support Farm & Ranch across the United States. These customers provide agricultural real estate loans to farmers and ranchers in support of ag production, from young beginning small farmers to family farms all the way up to large integrated farming operations. Brad noted, a large network of active customers. We have actually over 1,500 active customers in Farmer Mac's network. Over the last 3 years, we've purchased loans from over 530 different customers in 48 states representing over 110 different commodities. So a vast network of institutions that we look to support as a secondary market. We offer a broad suite of products and I think Brad did touch on it as a secondary market. One of our unique natures is our ability, given our funding capabilities to support long-term fixed rate amortizing term loans. Not just long-term amortizing term-loans, but a broad suite of different products, leveraging long-term nature of these assets to support farmers and ranchers through the cycle. Ag is a cyclical business, and we need to provide products and services to support the cyclical nature. Given the strength of this underlying asset class, which is farmland in this case, there's very low risk of loss to Farmer Mac. And in this market, we generate a pretty effective and healthy net effective spread and a very strong return given these low-risk characteristics with the farmland asset class. But let's talk a little bit about business drivers in this space. I think first and foremost, ag is cyclical, right? Commodities and input prices are going to ebb and flow, and it's going to be different by different segments of the ag economy. As that takes place, a couple of things are going to happen. Borrowers are going to tap into their equity in their land to support working capital, to support liquidity, to enhance their operations, to grow their operations in many instances probably leverage their operations to buy additional farmland. One thing that's interesting about farmland supply is there's not a lot of it. So when it comes to market, it's very sought after. And in many instances, farmers are going to leverage the land to be able to provide that acquisition capital. Farmland has also shown resiliency in value appreciation and there's a very strong correlation with borrowing needs as that land value increases. And Brad mentioned this earlier, about 10% of farmland is levered at modest LTVs to say the least. We believe as generational transitions occur and additional interest in this asset class, especially from institutional investors, and I'll talk about this a little bit that's going to drive future borrowing opportunities for our customers and essentially for the secondary market of Farmer Mac. And lastly, our customers, which go to financial institutions here, are going to continue to manage capital liquidity and growth in an ever-changing regulatory environment. The benefits of being a secondary market is not only providing products and solutions for their borrowers but us providing products and solutions for these customers to manage their balance sheet. So a few points of differentiation that I want to focus on. First, innovative product set. Very few institutions out there are able to provide long-term fixed rate loans to support the needs of farmers and ranchers. Farmer Mac is one of those institutions, and the entire banking sector is not able to provide that type of capital. Second, Brad mentioned this, competitive pricing, efficient processes and a relationship focus. We pride ourselves on focusing on our customers and enhancing that relationship also supporting their borrowers. And lastly, and I think one thing that's very going to be important for growth for us in the future is automation and disruption, specifically of the ag lending process. Brad touched on this. How can we make the time of our Farm & Ranch to get capital from the secondary market as quickly as possible. We're thinking ahead, how can you push a button, transfer all the data to Farmer Mac, get approved, rate lock and fund within 6 days. It's visible, and we're investing in the technology and data and automation to get that done. So Marc, let's turn to our first case study. So this is a typical transaction we see in Farm & Ranch. This is a family farming operation in South Dakota. They're farming alfalfa and grinding hay to sell to local dairies and feed lots. And we purchased this loan from a local bank serving the South Dakota market. What the borrower wanted to do is a few key things. First, refinance numerous loans into one consolidated debt package. Second, get a long-term fixed rate loan. And third, leverage some equity to enhancing the expanded operations. So we provided a 30-year fixed rate amortizing term loan, $5.3 million to our seller to provide it to the borrower. So why don't -- why was Farmer Mac resonated in this situation, innovative product set? The borrower wanted to lock in a low interest rate during the time, wanted to extend the maturity of the debt profile and consolidate it down. And through our competitive and efficient process, we're able to provide that seller who could not provide that type of product to the borrower, the liquidity and the need to do it as quickly and efficiently as possible. Marc, typical Farm & Ranch deal. How do we think about credit and the considerations to make the right choice?

Yes. These are really good loans for us. This one, in particular, is a family farming operation that's been around for 50 years. The collateral is excellent, as we've mentioned. In this case, it was 55% loan to value, and that's about typical for us, at least it's average. We, of course, look at the financial statements. Primarily, we're focused on reasonable leverage, in this case, strong debt service coverage and a credit score. This was very mission-focused for us. This financing supported the expansion of the farm. And this is a good example of where we provided long-term financing, 30-year fixed rate financing, very competitive pricing with an efficient underwriting and approval process. And we've touched on this, but we're a through-the-cycle lender. Agriculture is a cyclical industry, and we're going to be there for these farmers and ranchers even when times are tough. And in those cases, we're really focused on the liquidity in terms of our financial analysis.

Great. Marc, a quick follow-up to that. I mean we've seen a pullback in commodity prices from the 2022 highs and sticky input costs. Given we're a lender through-the-cycle, what are some of the considerations from an underwriting perspective we look in this environment?

Yes. I mean I think it's the same regardless of the cycle, and I'll just sort of emphasize what I already said. It's -- we're really focused on liquidity. If a farmer or rancher has good liquidity, then they can make it through the cycle. And if they don't have liquidity on the balance sheet, you also referenced that, there's typically an opportunity to releverage the real estate and bring liquidity back into the operation.

All right. We're going to move on to one of our newer businesses in the agricultural line of business, corporate ag finance. And our focus here is to support financial institutions that provide capital to agribusinesses in the food supply chain. This is still very mission-focused, right? These businesses by a significant amount of agricultural commodities to produce food, fuel and fiber. Some key examples corn to produce ethanol, wheat and barley for food and beverage production. So again, right in line with the mission of serving farmers and ranchers and driving to ag commodities to market. Very different than Farm & Ranch. So these are typically much larger transactions. So I'd say at least $50 million up to hundreds of millions of dollars based on the size of the borrower and the financing needs, typically arranged by larger financial institutions. In many instances, are participating or led by a farm credit system institution, and typically have numerous lenders, I'd say multi-lender or syndicate transaction, supporting the overall financing need, and Farmer Mac is typically a participant in that deal. . While these transactions are secured, they do differ from Farm & Ranch. So typically, here, we're underwriting the business model. The ongoing cash flow generating ability of the business to support its operations, support its debt service and be successful in the future. So enterprise value transactions, again, focused on cash flow generation support similar Farm & Ranch, but not relying as much on the land collateral. Given these risk characteristics, the yields in these businesses are very accretive to Farmer Mac. And generally, we -- our net effective spread here is one of the highest across all our portfolios. And even from a risk return standpoint, we have a very accretive return given these numerous risk characteristics. So business drivers in this space generally depend on kind of what sector in the ag space we're supporting. Is it dairy processing? Is it forest products? Is it food and beverage manufacturing, all those have different cycles, all those move up and down. But the 1 key theme here is these businesses are going to invest for scale, invest for manufacturing and processing capabilities and grow with the food, fiber and fuel space. So is that an acquisition that comes up and they're going to need capital for it, or they're going to continue to invest in manufacturing efficiencies. This is an ongoing need that we'll continue to see. In addition, Farmer Mac supports our customers. Again, as a secondary market, we're a risk mitigator for financial institutions. As these institutions want to grow with their customers, right, they're going to get into a point where they need to manage concentration limits, exposure limits, capital, and our secondary market solutions can provide that risk mitigation by selling us loans to our balance sheet so they can continue to grow with their borrowers. I'd say the primary differentiator here for Farmer Mac is our secondary market structure. It's very unique, right? -- essentially as a capital provider, we're nonthreatening, we're not originating loans. We're not competing for the borrower relationship. We're purely there to provide capital to the lending institutions arranging the transaction. That's unique and very valuable. And so all these financial institutions that we've developed relationships with over the last 4 years, look on us very favorably because our secondary market structure is purely there to support their needs and their borrowers' needs. I'd say this differentiator, coupled with our mission focus and being dependable through the cycle, really makes us an attractive participant in this space, and we've seen significant growth here over the last 4 years. All right. So let's talk about a quick case study in corporate ag, and this is a great example of food supply chain agri business that purchases a significant amount of commodities to produce bakery goods. Long history in the space, a 170-year-old integrated bakery, and essentially, what happened is there is a large commercial bank that was providing financing for a family office sponsor to buy the borrower as well as the borrowers needing additional capital to support future operations. Farmer Mac purchased a participation in a $910 million transaction. Again, a syndicated transaction supporting our customers. So why did Farmer Mac resonate in this space? Well, clearly, our mission, right? And a lot of these -- most of our portfolios, mission focus is critical. We support ag, this financial institution is raising a transaction for a long-term bakery and this bakery or a seller, the ultimate borrower was looking to grow. But also more importantly, our secondary market structure. We're not threatening, we're not competitive. The arranger of this transaction looked at Farmer Mac very favorably versus other financing alternatives, other lenders because we're noncompetitive and we're not originating loans, and they don't have to worry about us as well as the dependable ability to provide capital for this cycle. Marc, these are much different deals than Farm & Ranch. So a lot of different credit characteristics. So how do we think about these types of transactions in corporate ag?

Yes. In this case, our considerations were -- I mean, this is a business that's been around for a long time, 170 years old, owned by an experienced investor with dry powder to invest additional capital, if necessary. A large commercial bank led this transaction, and this business, in particular, had stable cash flow and margins, primarily driven by noncyclical demand for bakery products, strong customer diversification, long-standing customer relationships, and customer contracts that allow the borrower to increase prices when their input costs increase. So they buy flour, butter, sugar, that sort of thing, they could pass those price increases along to customers.

Let's move on to our wholesale finance line of business. So in Farm & Ranch and Corporate Ag finance, we're talking about buying loans and putting them on our balance sheet from our customers. Wholesale Finance is a different business model. So here, we're financing institutions that are holding the loans on their balance sheet for specific reasons. Our customers range from large financial institutions to institutional investors, funds and real estate lenders. The characteristics of these transaction very are, but generally to strong, highly rated, large financial institutions that also provide financing to borrowers in the sectors we serve. So insurance companies providing loans to farmers and ranchers to put on their balance sheet. We're secured by those pools of loans, typically overcollateralized, as Brad mentioned earlier, and can be fixed or floating rate securities. And this differs, right? So we're financing the organization, providing financing to farmers and ranchers. They're going to manage their asset liability dynamics one way and we support that dynamic. Given the strength of these customers, very highly rated and the strength of the collateral securing our facilities, these are very low-risk transactions for Farmer Mac. Our net effective spread here is lower than Farm & Ranch given that low-risk nature, but our return is probably highest across all our portfolios, given these low risk characteristics. . Business drivers here generally reflect our customers' needs for liquidity and financial liquidity and funding needs, especially in volatile times, these institutions are really looking to diversify their funding sources. A good example is during COVID, the bond market froze up. And as our institutions want to continue to finance their ongoing needs, they need to find different alternatives. So they look to a unique product like Farmer Mac that can offer a wholesale financing to provide that liquidity. As I mentioned, a strong driver of growth here that we see in the future is the significant interest in the institutional market for farmland. It's an inflation hedge. It's not necessarily correlated with other broad markets and received significant capital deployed in this space. And as these funds look to deploy capital in the farmland space, they'll look to Farmer Mac as a wholesale solution to leverage it. So a few key differentiators. There's not a lot of capital sources like this in the market. So we're a unique player. Institutions looking to diversify their funding sources outside of the capital markets or FHLB or deposits, we'll look to Farmer Mac to really augment their capital stack. And given our mission focus, we're dependable through the cycle. We had lots of customers during the COVID volatility that looked at Farmer Mac to provide necessary liquidity and funding when other markets froze up. So that dependability and our mission focus was critical. So on a Wholesale Finance case study, this is an example of a large, highly rated insurance company looking to diversify its funding sources. The collateral securing our wholesale facility with high-quality Farm & Ranch-type loans. The insurance company wanted to put on our balance sheet to match its pension obligations, right? So that is why some of these organizations want to continue to hold it on balance sheet. We structured a $750 million wholesale facility to allow the borrower grow, right, to continue to provide liquidity to farmers and ranchers across the United States. Farmer Mac's value proposition here was this was a unique facility. The insurance company wanted to augment its capital stack with competitive pricing, unique alternatives and dependable capital provider. And that was ultimately what the need for this facility is for. But Marc, a different kind of portfolio for Farmer Mac what do we look at from a credit perspective?

These are very low-risk loans for us. Zack mentioned, in this case, our counterparty was a large investment-grade insurance company with a diverse portfolio, a long successful track record of originating, underwriting and servicing agricultural loans. Our collateral is a pool of Farm & Ranch loans that we would put on balance sheet, so very low risk. And a strong, well-structured financing agreement. So in addition to having an investment-grade counterparty, in cases where there's a delinquent loan in our collateral pool, the agreement requires the counterparty to pull out that delinquent loan and put in a performing one. So our collateral pool remains very strong at all times.

Great. So let's flip over and talk about our rural infrastructure line of business. And our first portfolio here is Rural Utilities. And so our focus is to support financial institutions that provide capital for rural electric generation, distribution, transmission, cooperatives throughout the United States. Again, a cornerstone of our mission really to serve rural communities. These are highly rated cooperatives that provide essential service, electricity to rural America. These transactions are typically secured by the power generating distribution assets of the borrower. Given the long-term nature of these assets, these borrowers are typically looking for long-term fixed rate loans, leveraging the secondary market and our funding capabilities to provide that type of product. Given the real strength of the borrower and the secured nature of our loan, again, these are very low-risk transactions for Farmer Mac. Our net effective here is probably the lowest across our portfolios, but our return is still very accretive just given the low risk characteristics of the borrower. Business drivers, the ongoing need for electrification. These companies continue to need capital expenditures to expand their generating capacity, expand their distribution network in the transmission lines. And I say a big component of that more recently is the growth in the rural populations. So since 2020, since essentially COVID, rural populations have been increasing. The prior decade, it was probably net flat to decreasing. So we've seen growth in rural populations and the rise of remote work is allowing them to live where they want to live and still do their job. That is creating additional demand for electrification in rural communities. In addition, and I say this is a big component of future growth for us, the electrification needs of new technologies, artificial intelligence, data centers, electric vehicles, it requires a tremendous amount of electricity, and that is going to continue to help these rural utilities need more generating assets to support that demand in rural areas. A few key differentiators for us is really our innovative product set to support long-term fixed rate loans in a dependable and efficient manner. We're competitively priced. We can efficiently onboard and our customers look for us to be that value proposition. I'd say the second thing is really dependability and at times, the ability to write really large capital checks, right? Some of these times, if you're building a large renewable energy-generated facility, you need a lot of money. And given the low-risk characteristics of these co-ops, we're able to provide that capital. This is a perfect case study for our Rural Utilities business, an 88-year old distribution co-op serving rural Georgia. We supported the seller here, our customer, a cooperative financial organization providing capital to this borrower to increase its distribution capabilities as well as provide fiber broadband to its territories. The need reflects the continued population growth in the rural Georgia market where this co-op was serving. We provided a long-term fixed rate 30-year loan to support this fiber build. So why Farmer Mac? Again, our mission fits very nicely with this to support rural communities. Our seller was very appreciative of our focus here and ultimately aligned with the borrowers' financing needs. But also our ability to support a long-term fixed rate loan in a very efficient and competitive way, really made us the partner of choice for a seller in this transaction. Marc, a foundational business model for us. How do we think about the credit component?

Yes. Another low-risk loan for us. 88 years old, this utility was founded in 1936. Our internal rating corresponds to an investment-grade rating. The considerations, the credit considerations that we primarily focused on, this utility has rate-setting autonomy, provides an essential service, electricity, serves 36,000 customers, so no customer diversification -- or sorry, no customer concentration and it gets its power supply from an investment-grade generation and transmission utility under a contract that lasts for many decades. And we look at financial statements and do financial analysis on all of our loans. And in particular, here in Rural Utility, we focus on leverage and debt service coverage.

Great. So we'll conclude today talking about, I'd say, our 2 of our newest portfolios in real infrastructure, telecommunications and renewable energy. And as Brad mentioned, we've doubled renewable energy portfolio over the last couple of years. Last year, our telecommunications portfolio increased 60%. So really a new area of focus for us. So we'll talk a little bit about what that means. So on the telecom side, our focus is to support financial institutions that provide capital to -- for broadband, fiber, wireless, towers, telecommunication companies serving rural America. A very mission-focused portfolio as we look to bridge the digital divide for rural communities. Overall, this is very much like loans we see in corporate ag finance. So the transactions are typically larger in size of $50 million up to hundreds of millions, led by large financial institutions that are typically multi-lender and syndicated transactions. Farmer Mac is typically a participant in one of those transactions. And we underwrite and look at the business the same way, right? So we look at these businesses to see the ability to generate cash flows on an ongoing basis, support its operations, support its debt service and have a successful model into the future. Telecommunication transactions typically have a much higher yield than our rural utility space. They're floating rate loans and have a much shorter maturity. So do provide nice asset diversification for us, right? Rural Utilities is long-term fixed rate. Telecom is short-term floating rates, so that's a nice balance. And given the high interest rate yield that we receive here, it's a very accretive net effective spread for the rural infrastructure line of business and a very accretive return given the risk dynamics. Few business drivers here. I say the first and foremost, is bridging the digital divide. I mentioned earlier that the rural populations are growing, the rise of remote work is growing, that increases the need for faster Internet speeds. So these companies are looking to put more fiber assets in the ground to support fiber-to-the-home or broadband fiber to get that Internet speed out to rural America. Strong government support, RDOF, BEAD, numerous government programs that provide additional grant money for these companies to put fiber in the home. So they get the grants out there, but they need borrowings upfront to support that grant over the long term, and that's why they can leverage the secondary market for increased growth opportunities. And lastly, a significant amount of private capital, and I say more or less the infrastructure funds, but very favorably on this asset class. There are a significant amount of companies out there that have spent years putting fiber broadband in the ground. And that's a very valuable asset. It's the fastest Internet you can get. And as this capital is deployed to consolidate the industry, we expect additional borrowing opportunities for Farmer Mac. So what's our differentiating factor here? It's a secondary market structure. Again, we're not competing for the borrower relationship. We're not originating loans. We are the dependable capital provider for organizations arranging these transactions. That is unique to us and that makes us very attractive participant. I'd say our dependability and mission focus be there through the cycle. Those 2 differentiators with experience and understanding the space really make us an attractive participant. All right. Here, we have a 70-year-old telecommunications company that's been operating in the Carolinas and Virginia areas for quite some time. And more recently, they've been expanding to provide fiber broadband to the rural communities. What is that offering? It's offering quicker Internet speeds for their territories, much quicker than coax and DSL, but also it's helped mitigating some of the declines they saw in their legacy voice and cable services. We supported the seller, a cooperative financial institution by providing a part of a syndicated $191 million syndicated loan facility to support this fiber build-out. So our value proposition here was clearly a mission. It aligns very nicely with what the borrowers' needs. They wanted to bridge the digital divide and provide faster fiber Internet to rural communities. Since we're a secondary market, again, we're a dependable nonthreatening capital provider. We're there to support the financial institution arranging that deal, and that's typically what you see in these types of transactions. And lastly, experience matters. We've hired the right people. We have the right experience to assess these deals, to understand the right risk dynamics and make the right decision for our customer and Farmer Mac. Marc, one of our newest portfolios. How do we think about telco and what's important to the credit consideration?

Yes. Again, this is a business that's been around for a long time, founded in 1951. This business provides a full suite of communication services. It's led by a farm credit institution that has significant experience in the space. What we liked about this deal in particular, was it had a recurring revenue business model. About 80% of the project was funded with government grants. The customer churn was minimal, increasing revenue per customer is what the borrower showed. And the company had a very strong market share in this region. And also, again, we're focused on the financials, of course, reasonable leverage and a strong debt service coverage ratio. And 1 thing I just want to highlight, I mentioned earlier that these are 2 of our newest portfolios and relationships and experience matter. And we've recently hired a Head of Renewable Energy with significant experience. He's been around for about 6 to 8 months and excited to announce that we've just highlighted a new Head of Telco that will be joining us and has 25 years of experience. And we're really trying to put some structure and foundation in place to grow this into the future. So this finishes our renewable energy portfolio. Focus here is to support financial institutions that provide capital for the construction, development and operations of renewable energy generating projects. Again, a very mission-focused business for us as we look to support the transition to sustainable energy. Our portfolio here is primarily solar generating projects, including community solar, wind generating products and associated battery storage. Our focus here is a little bit more broad. So we also want to focus middle market transactions in this space that generally have as many alternatives to arrange transactions in the market. And in many instances, Farmer Mac can hold the entire facility, 100% of the debt needs in this transaction. but we also participate in multi-lender larger syndicated transactions. The projects generally start as project finance project. So loans to construct the wind or solar generating facility. There's a financing need for the tax equity or credit bridge loans to take advantage of the tax incentives. And then ultimately, when a project's gets to completion, short- and long-term loans to support the ongoing support of the project. Given the complexity of these transactions, there's a lot of moving parts. We look to partner with strong sponsors that have invested in renewable energy for a long time. Financial institutions that have arranged these transactions, top-tier construction firms using top-tier equipment and strong operators. And typically, these transactions have long-term power purchase agreements in place with high-grade counterparties. That provides a tremendous amount of cash flow support given the strength of the counterparty buying the power from these projects. So we get really comfortable from the risk profile there. This portfolio has a strong and effective spread, very accretive and a very strong return given that risk characteristics. A few main key business drivers. First, the 2022 Inflation Reduction Act that extended the tax incentives for renewable energy generation and battery storage projects. The power industry is continuing to diversify its generating sources, reducing the need of fossil fuels and looking at low-cost renewable energy power generation as a nice addition to its portfolio. And I touched on this in telecom, the significant technology improvements is requiring a significant amount of electrification needs. Data centers provides -- that requires a tremendous amount of electricity constantly. And so a lot of these companies are looking for renewable energy power because of the low-cost power generating ability of it to support these data center needs. We differentiate ourselves a few key ways. And one being, we are able to finance the numerous amounts of loans in these structures. We can provide construction loans. We can do tax equity credit bridge loans and then we can do long-term fixed rate loans that most commercial banks in this market can't provide. Given our mission focus, we're again focusing on smaller transactions where maybe it's a little bit more difficult to find a financing in the market that Farmer Mac can step in and provide that support. And then again, we're providing liquidity and risk management for the customers arranging these deals. As they exceed whole numbers with certain sponsors or if the transaction concentration gets too big, they can offload some of that risk with Farmer Mac as it meets our risk profile. So let's conclude with our last case study. This is a financing the project to build a 125-megawatt product in Aurora-Georgia. The need is for a local rural electric cooperative to get more low-cost power to support new data centers being constructed in the service territory while also supporting these local communities with electricity. A mid-tier regional bank arranged this transaction and Farmer Mac was a part of the multi-lender syndicate. Farmer Mac resonated here because it is our mission to support renewable energy and the transition for the borrower to provide that capital to -- excuse me, for the borrower to get that capital to support on these customers in rural America. Again, it's for a secondary market, we're a very unique capital source for our customer who is arranging that transaction.

So Marc, what's the credit considerations here from a renewal energy perspective?

Yes. We look for experienced partners in these situations, and that primarily includes experienced sponsors, developers, construction contractors, equipment providers. And lead banks too, you mentioned we have an experience lead bank that led this transaction for us. And in terms of the debt structure, we had, in this case, a loan that amortizes over 15 years supported by a 15-year power purchase agreement with an investment-grade offtaker that was contractually obligated to take all the power at a fixed price. So that's a really good structure for us.

Great. But I just want to conclude with a couple of key themes. I mean, first and foremost, we wanted to demonstrate the diversity of our business model, especially over the last 5 years, we've grown in new lines of business. We've expanded and deepened our position in foundational lines of business, and that's really supporting the diversify going forward. Second, benefits of the secondary market. There's many unique things we as a secondary market can do to support the ultimate borrower but also to support our customers, the financial institutions as they manage their balance sheet. The strong business drivers in a lot of these businesses that we're supporting. We have a lot of tailwinds, and we're set up for success to support that growth long term. And ultimately, Farmer Mac and our mission is at the forefront of what we do and our mission is to support rural agriculture and rural communities. And our business model has set us up for success for that. So Brad, I'll turn it back over to you.

Correct me, but I think we're going to go to a break right now. Both the video -- thank you. Thank you. Yes. I mentioned when I got to the podium earlier today that -- we have been working to bring more tangible branding to Farmer Mac to express more clearly, the breadth of our business and what we do. So among many, many other things, this is a video that we just recently put together, I think we previewed it a couple of days ago for the Board and employees for the very first time. So you're catching this fresh. But it's the beginning of a whole series of things that tells the Farmer Mac story in a more compelling and a bit more of a motive way as well. [Presentation]

Okay. We're going to a short 10-minute right now, let's call it, 11:15 sharp. Purpose is just to stretch your legs, get something to drink. I would note that we have a number of members of management here. They have named pegs on. We also have a couple of board members here. They've just wrapped up 1 of the Board sessions and joined us. So I hope you feel free to introduce yourself and ask for independent corroboration on anything you've heard or just a different perspective. [Break]

It's a real pleasure for me to introduce Todd Batta to you. I don't think you've really heard much from him on earnings calls or in prior presentations. But Todd has been at Farmer Mac since 2019. I met him even before I started as CEO of Farmer Mac and it took me 6 months to bring him over. But he held the highest level staff positions at the Farm Credit Administration at the United States Department of Agriculture with key agricultural-focused senator's offices and brings 20-plus years of insight and expertise on federal and state agricultural policy and execution. Todd is our Department of 20 FTEs who runs government affairs at Farmer Mac. And he's going to give you a little overview of things we're doing. I want to make sure that he describes for you why it is that we're not subject to day-to-day influence from Capitol Hill in other places. Charlie and I were just talking about what happened at Fannie and Freddie years ago. And why it is that the charter that we have is something that you can count on going forward that our activity is focused on how we enhance our position, both in Washington, but our ability to deliver mission in the countryside. So with that, Todd. Thank you.

And I'll note that for 20 FTE when we talk on our budget Aparna. Brad did a good job giving an overview. I'm the Head of Government Affairs at Farmer Mac and just wanted to quickly talk a little bit about our charter and how we got to where we're at and then talk through some things that are happening in Congress right now as it relates to oversight and review of our chart room. So Farmer Mac, Brad provided a great overview earlier, Farmer Mac was created in 1987 by Congress to provide a secondary market to increase liquidity and capital and support for American Agriculture Rural Utilities and rural communities. We're regulated by the Farm Credit Administration, as you know, also the Security and Exchange Commission as a publicly traded company. And importantly, we are also overseen by Congress through the House and Senate Agriculture Committees, and that's an important part of the review of our charter and our mission and the parameters of how we operate and what we can and can't do. And it's true -- I'm going to skip to you kind of the next thing here and talk about farm bill. So it's through a farm bill is where Congress takes a review of all credit policies. So farm bill is a comprehensive piece of legislation that Congress looks at every 5 years. And this bill governs and regulates all the policies and programs that impact Real America, anywhere from farm to fork. So when you think about a farm bill -- this is farm price support programs, it's food security, it's trade, it's conservation, it's energy, it's credit, it's access to opportunities for rural America in terms of economic development. So this is the key driver. It is the key piece of legislation that helps the vitality of rural communities. Embedded in a farm bill, when we say the word farm bill, what does that really mean? It's an omnibus piece of legislation. So Congress takes dozens of statutes, put them together into 1 bill, reviews them on a cycle basis of every 5 years and then moves forward with the authorization. So Farm Bill contains 12 titles. Credit Title being one that we pay attention to because within the credit title, Congress will review the Farm Credit Act, which is where we drive our authorities from along with the Rural Electrification Act, where we drive our authorities from. So Congress is in the midst of this cycle right now. We're reviewing -- you heard from Zack and Marc and they were talking earlier about opportunities that we see on the horizon. And so how do we relate our mission to some of the interests of things that are happening within Congress. Obviously, broadband delivery and energy are 2 areas of focus, supporting the next generation of producers, which gets into the mission of our small farm work and our family farm work. And we have some great opportunities potentially we've been working and engaging with stakeholders and thinking about how we can more holistically improve how we do business, how we can more efficiently do business. And so we're excited with the Farm Bill kicking off. It's an interesting 2 weeks in terms of Congress with the Farm Bill because the house is really starting to kick off the process. Tomorrow, Glenn Thompson, who's the Chairman of the House Ag committee is expected to release the language of what's the house bill. So we'll get a preview of what that actually looks like at that point in time, and they're looking to mark up, which is really the kickoff of the process. And so within that bill, we've been talking with Congress, and we've been talking about ways that we can more effectively deliver credit, ways we can enhance our mission to deliver on the priorities that are out there for rural America. And I would just note that this is the start of the process. So we're just starting to kick this off. It's going to be a long journey in terms of the way, but we've had great discussions about, again, how we can more holistically continue to fulfill our mission on how we do it and how more effectively and efficiently we can. So I'll leave it there. I'll turn it over and look forward to responding to any questions you guys have during the Q&A session. But it is really an exciting opportunity to be here to talk to you guys directly about some of the things that we're focused on in terms of our mission, our mission delivery, how we can enhance how we're doing our telecommunications role infrastructure work support agribusinesses and support American agriculture.

Thank you so much, Todd, and good morning, everyone. It's such a pleasure to be here with all of you. And I also want to echo Brad's thanks in terms of taking the time to be with us today, lots of familiar faces, and a thank you also to those of you who've tuned into the webcast. Let me just start off with the headline another boring quarter for Farmer Mac. When we see that headline on Seeking Alpha, I've got to tell you, some of us stand up in chair, and that's usually in -- Gary Gordon has written that article. And I promise for the next 30 minutes not to be boring, but what I will give you is perhaps a little bit of an overview around our funding strategies, asset liability management. You heard about that from Brad. Some of our key metrics, the things that we focus on, where have we been and where are we headed? So you'll see a little bit of numbers behind some of the case studies and some of the portfolios that you heard from both Zack and Brad. Okay. So where have we been? And let me just decompose this somewhat busy slide for you. But for those of you who've tuned into some of our equity presentations, you've probably seen semblance of this, so this should be somewhat familiar to you. But for those of you who are a little bit newer to our story and to our financials, let me just give you a sense of just how we think about our financials, right? So at a very macro level, by now, you've learned, we're not a bank. We're a financial institution in a secondary market, the premier secondary market providing credit to rural America. And so we fund our balance sheet not through deposits, but we fund it through a series of unsecured debentures, and we can do that at all points on the curve. And these debentures are contractual. So unlike deposits, we actually have the ability to either call or to issue debentures at all points of the curve. So tremendous funding advantage, and I'll talk a little bit more about that. So when we think about our top line revenue, we are not dissimilar from how banks think about their top line revenue. So banks think about the top line revenue in terms of net interest margin. So it's really the yield that is earned on the loans that are provided less the cost of funds, right? So that's the simplest explanation for how banks think about the net interest margin. We do something very similar. So you heard from Zack around these different borrowers that we actually will fund either through our counterparties, such as banks, financial institutions, insurance companies, et cetera, but we will lend them for a period of time at a rate that's market competitive. And then we fund that through these unsecured debentures and more recently through securitizations, and I'll talk about that momentarily as well. So when you add all of that together and you take that yield less the cost of funds, you get to essentially a margin, and that's our gross margin. And that's really what you see on a series of these blue bars. We do not call that net interest margin. We call that net effective spread. And the reason for that is very simple. We actually do take on through our planning process a way in which we fund our balance sheet is through the use of derivatives. And we don't do that for speculative reasons. We only do that for risk management. And so when we think about this, we think about it as a non-GAAP measure, and it's a very important distinction for us in terms of net interest margin versus a net effective spread. Our net interest margin is really a GAAP measure, and our net effective spread is really a non-GAAP measure. And so that's really what you see in terms of top line revenue. So if you're wondering, why is the effective spread, we'll just think of that as yield on the loans less our cost of funds, and it takes out the volatility that you get inherently from dabbling or executing in swap and derivative markets. Okay. So when you think about our bottom line revenue, that's really shown in the orange boxes. And so that's our top line revenue and net effective spread. And from there, we strip off our general administrative expenses, compensation expenses, taxes, et cetera, and we get to a net income. And so the net income is really just that, but we call it for earnings because it's taking out this volatility that I explained to you around dabbling in derivatives and in swap markets. So now that you understand exactly how our P&L is constructed, how have we done? Brad highlighted a very important number to you in terms of just how we've grown. A lot of that is dependent on how well we've executed on our earnings profile. So our stock has had a tenure run of about 14% relative to the S&P 500, which has grown at far less. And a lot of this is the success of our top line revenue, which has had about 18% nes CAGR, translated into a 16% core earnings CAGR over the past 5 years. And so how have we achieved this? You heard about the different lines of businesses, and I'll get into some of the segment profitability that's really driven some of our success in the top line revenue numbers that you see here. And so that's been a huge component of this and especially in the last 5 years, as we've expanded into these new revenue streams, such as corporate ag finance, such as renewable energy, more recently, telecommunications all that on the platform of an extremely stable portfolio of agricultural loans within our Farm & Ranch sector as well as our wholesale funding segments that criss-cross both our agricultural segments, but also our rural infrastructure segments. What you really see is this incredible diversification that allows us to fulfill our mission, but also allows us to grow and expand into new markets while widening our margins. So that's been a big driver, especially in the last 5 years of our ability to do that. Funding is an extremely important component of all of this. And managing your funding such that you minimize your volatility is absolutely our #1 strategy, right? We do not -- even though we're a publicly traded company, we do not focus on quarterly earnings. You will not see that sort of up and down, zigging and zagging that you might see with other publicly traded companies. The reason for that is we have a very disciplined asset liability management process in place, and I'll talk about that. Okay. So let me very quickly touch upon segment profitability. We've got 2 major lines of business. You heard about that earlier, Agricultural Finance and Rural Infrastructure Finance. That's really how we've chosen to demarcate our portfolio. Within each line of business, we have 2 distinct segments. Farm & Ranch Corporate AgFinance with an agricultural finance. Within rural infrastructure, we've got rural utilities and we pulled out renewable energy. And over time, you'll start to see as the telecom portfolio grows, we'll start to really take that out of that segment so that you can really understand the drivers of the dynamics that drive profitability within each of the segments that do have a very different sort of borrow base and other dynamics. So if you just look at our volume, we're just a little shy of about $30 billion. This is really reflective of the fact that we've had a tremendous amount of growth effectively across all cycles, but especially in the last 5 years, Brad talked about what attracted a number of us, certainly, I came to Farmer Mac. I'm not knowing that much about agriculture, but with deep expertise in banking, but really excited about the opportunity to come to an organization that was just rightsized, but with a focus on growth, with a focus on innovation and with the ability to really execute because it had such a strong financial base as well as such a strong credit base. And so you'll hear a little bit more as I get into some of those metrics. So when you think about a net effective spread, and I talked about what net effective spread is, the range of our net effective spread is anywhere today from 40 basis points to about 200 basis points. If you go back 5 years, and this is an important and key point, and it speaks to really the diversification of our revenue streams and going into these newer lines of business, fulfilling our mission as we step outside of the farm gate, we've been able to really have more variability in our net effective spread. And that is really important because in the last 5 years, I think we can all attest to the fact that we've had anything but a normal set of conditions in terms of an interest rate environment. And so we've been able to really triage very effectively and be there for our customer base, just as Zack described, and that has all translated into a very steady and actually an increasing trend of profitability and margin growth. Well, if you just look at the net effective spread, you might say to us, why don't you just do Corporate AgFinance all day every day. Why are you in rural utilities that's only yielding you 40 basis points? Why are you in Farm & Ranch that's only yielding you 99 basis points. I think what's really important is to think of us not just as a P&L company. We're not a services company. We're a balance sheet company, first and foremost. We think about our balance sheet in terms of spread, fee income, assets under management. And all of that generates different components of revenue stream. Although we're not a bank, we do have a primary regulator. That's the farm credit administration. With the only secondary market, we've got an office that's actually dedicated to us and pays a lot of attention to us, and we take -- our mission as a GSE, very, very seriously and included in that mission is a responsibility to be well capitalized and to be safe and sound. So we are governed by a host of liquidity and capital ratios. I won't get into all of those today, but suffice to say that we are a regulated capital entity. And so as we think about that, it's not dissimilar from how banks allocate capital, we use a risk-weighted asset mechanism to really think about every asset that we bring on our books. And in times such as this, where entities have to go out and raise capital, it can be incredibly expensive. And so when you are trying to enter a market and you're thinking about the risk and return dynamics, that consumption of capital becomes a very important metric, and we pay very careful attention to that. So we've not only looked at the P&L dynamics in terms of our net effective spread and our offline revenue, we also look very carefully at how much capital does each asset really consume. So not every dollar that we bring on our balance sheet is created equal. So really, as you're thinking about this and considering us as an investment opportunity, think of us in terms of our risk-adjusted gross return on allocated capital. And that is column right at the end. And what you can see is that -- and let me just point out a couple of examples, right? If you look at renewable energy, it's extremely accretive in terms of net effective spread at 155 basis points. Contrast stack with Farm & Ranch. It's a full third higher, right, at 99 basis points. But if you look at the risk-adjusted gross return on allocated capital, given the risk profile of the underlying collateral, and I will just pause it that renewable energy is actually fairly riskless for us for a lot of the reasons that you heard from Marc and Zack as they went through it. But just given the way capital is allocated across these segments, they have a very similar profile in terms of what I would call the risk-adjusted gross return on capital. So we look at both metrics. How are we taking every single dollar of capital that we raise from Wall Street, our debt, our securitization and how are we deploying that effectively to continue to generate that return on equity. So that's really how we think about this. And as you look at our profile of our financials, what you'll see, given the way in which we've raised capital fairly accretively over low interest rate cycles, coupled with disciplined asset liability management, and frankly, accelerated by some of these new revenue streams that we've actually brought on with Zack's team over the past 5 years, we've really expanded our bottom line net effective spread from what used to be a target of around 80 to 90 basis points going back 5 to 7 years ago to now 118 basis points, which is really the high watermark I have known as of 2023. So a lot of this has to do with the diversification of revenue streams and it's something that you're going to continue to hear from us and have heard from us in our different earnings calls. Well, you can't really be in the lending business without paying attention to credit. And part of my background before I came to Farmer Mac, Brad recruited me in the fall of 2019. I knew about Fannie and Freddie, I had lived through the financial crisis in '07 and '08, that's when I joined the Fed. The first thing I thought about was, well, gosh, what about credit, long history in banking prior to go into the Fed. I had to look twice when I opened up and did my own due diligence and found that, is it really possible to have an entity with this kind of a credit profile? On average, we have about 2 basis points of credit losses on an annualized basis. And a lot of that had been driven by the fact that the vast majority of our portfolio was concentrated in Farm & Ranch loans. Marc talked about the collateral and the credit considerations that we look at. And you can really see, and I won't read all of this out to you, but as you compare and contrast us to our peers and to other lending institutions, perhaps with a different product profile, you'd be hard for us to find another entity with a credit profile like this. Now this is a real opportunity for us because we've also grown our earnings very consistently. We've grown our capital base very consistently, and that has allowed us -- the solid foundation of credit has really allowed us to now incrementally take on additional risk and go into newer lines of business like telecom, like renewable energy, like corporate ad finance that perhaps don't have the same credit profile as a Farm & Ranch loan, but that are still very central to our mission where we can actually play in these markets by taking on incremental risk. And we can really do this because we build credibility in terms of how we manage our credit, both on a portfolio basis, but also on a loan-by-loan basis, depending upon the line of business. So just moving on from here, let me sort of pivot to -- so where are we really headed? I talked about the last 5 years and the run-up that we saw in terms of growth, the building out of our new business lines, the incredible profitability that we've enjoyed. Just in 2023, our net income, our core earnings grew by over 35%. We've had an excellent first quarter. And I can throw out a lot of different metrics at you, but this really comes down to math, right? As you grow bigger and bigger, as you look ahead, the number that we have to sustain to grow at, has been remarkably consistent. So as we look out over the next 2, 3, 4 years, we think about a strategic plan and our business plan, we project conservatively. And I'm going to say that these are conservative estimates. We do see a lot of tailwinds that could change some of these projections. But where we really target being is in the 7% to 9% CAGR for volume growth. I also think it's very important for you all to take away from this that not every single dollar of asset volume that's brought on to our balance sheet is equal to another dollar. And you saw that when you look at our segment profitability. So when we bring on a $1 of renewable energy or telecom, that's much more accretive in terms of profitability relative to say, a wholesale financing strategy. Low-risk, low-return all checks out. So that's really where we're headed in this diversified product suite really enables us, and it's mission first for us. And if you -- if we fulfill our mission, and we continue to diversify our product set, we think we can capture a lot more of the addressable market that's out there, not just in agricultural finance, but as we think about renewables and other areas and the demand that we see in those sectors, I think we're very well positioned to really capture more market share. So let me just pivot from sort of our revenue strategy to how is the sausage made and how do we really fund our balance sheet. If you go back, and I've had this question from different investors, as they ask us, how do you weather the financial crisis. And during '08 and '09, our credit remained very strong. We did have a little bit of an aggressive posture with respect to our investment portfolio and exposure to certain preferreds, Fannie Mae preferred, for example. Since then, we've really sort of taken a hard look at our liquidity investment portfolio, and we've held that it's about a $6 billion portfolio, and we hold that purely for liquidity reasons. So let me just throw out another metric at you. You'd be hard pressed to find another financial institution that could say, hey, we've got 340 days of liquidity. So what does that mean? Go back 6 months, when there was the threat of the government shutting down and there was a downgrade, frankly, of sovereign debt. We did not bat an eyelid. We could go ahead and expand into telecom. Zack talked about the fact that just last year, we grew our telecom portfolio. We were able to fund that telecom portfolio without really blinking an eye. And that has to do with the fact that we have taken advantage opportunistically when we could, and we'll continue to do that, to bring on additional debt. But we have this robust liquidity portfolio that affords us the ability to really weather a lot of disruption, market disruption as well as financial disruption, that can be quite uncontrollable. COVID being a case in point. We have a very disciplined approach to asset liability management. For those of you who follow financials and the banking sector, asset liability management is this discipline, that perhaps not too many people know about, but sort of came to the forefront with obviously the collapse of Silicon Valley Bank, right? When we saw that just a year ago, and I think it was March of 2023, it was quite baffling, frankly, to our ALM team because this is rooted in our DNA. You heard that from Brad. Rates go up or down, plus or minus 100 basis points, Farmer Mac's net effective spread does not change very much. I started my career in commercial banking and one of my first jobs was to run an ALM book. I remember distinctly. And again, I had to look twice when the ALM team showed me what the stress levels are when we shock our interest rate profile. I was really puzzled. How can you have just almost negligible variance in terms of profitability when rates go up and down? I remember being in banking and looking at 20% change in profitability as being something that was actually considered pretty good. So I'll get a little bit more into some of those numbers, but that is the reason we're able to sustain this very predictable flow of margin that then translates into this forward-looking visibility that Brad talked about as we bring on an asset and that asset continues to generate that long-term stream of revenue, and that has to do with how we manage our asset liability management. Okay. So net effective spread, very similarly, we expect that we'll have about a 7% to 8% CAGR as we look out ahead. Very important to note that we don't do cost plus pricing. When Zack and his team are out there, they're looking at a lot of different dynamics. And it tends to be pretty fast paced. We've got our portfolio that's optimized on a daily basis in terms of what the cost of funds are and how we fund it. There's a lot of discussion and dialogue with the business development team, with Zack's team as they're looking at the market and what the competitive pricing dynamics are. And just given our funding advantages, we can be price takers where we need to be, we can be price setters where we need to be. And this is something we don't take for granted, but we can really look very thoughtfully at the deals that come in and make sure that they fit within both our credit blocks, but also within our hurdle rates. And our funding and our investment portfolio also contributed to the overall net effective spread. And I'll just say 1 thing about that, if you were paying attention to the last bar on the chart where I talked about profitability and net effective spread, and the fact that we had a 37% increase last year in our core earnings, a lot of that have to do with the fact that we had really raised a lot of cash as well as a lot of capital when we didn't need it in 2020 when rates were really low. When Fed funds rates were at least a full 500 basis points below where they are today, we went out and we raised through a series of preferreds but also did $600 million to $800 million in cash funding. And all of that has actually just repriced as the Fed has raised nominal interest rates -- repriced and generated a very nice return. I'll talk about that with respect to our asset liability management because a natural question might be, well, what's the volatility like when rates come down, and I'll get into that in just a moment. Okay. So as we think about our funding segments, and I talked about our liquidity portfolio, this is just to give you a little bit of comfort. As you look at this about $6 billion portfolio, a large chunk of this is concentrated in cash and cash equivalents. It's guaranteed by GSEs and government agencies. Why is the investment portfolio really important as you consider us as an investment and you're thinking about, gosh, the banking industry? And some of the other entities, frankly that were chasing yield. We don't chase yield in our investment portfolio. It's purely for liquidity reasons. And that has really proven to be the right strategy for us. And let me just explain that in a little bit more detail. The reason some banks found themselves in a little bit of trouble last year through their investment portfolio was not because they took on credit risk in their investment portfolio. They chased yield. And they look for yield at a time when rates were really low and they went ahead and extended their investment portfolio. We did just the opposite, right? When rates were really low, we went out there, we raised a lot of capital. We layered on a lot of cash, and we kept all of that short, right? We did not chase yield. Instead, we focused on building out and diversifying our revenue streams. We do not run a trading book. We do not have an investment portfolio for anything about liquidity. So it creates some asymmetric benefits, but we use that to really manage our overall ability to be there for our customers. So it's all about our mission and our program assets. And that is one of the reasons why our investment portfolio did not take on the level of losses that you might have seen with respect to other banking entities. So the benefits from our asset liability management strategies are evident, as I talk a little bit more about how we actually do this. We have a very, very conservative ALM strategy. And it's not just managing our margins, but it's a mantra within our asset liability management team is mitigating volatility first. That's the #1 goal. The second strategy is to opportunistically fund so that we can pick up a few extra basis points that allow us to generate that return, right? We don't do it in reverse order, we never will. We do not actively trade assets. Our investment portfolio, I think I can't see this enough, it's not speculative at all. And we do use derivatives. So Brad, as he was talking about the operating model and as we fund our assets -- let me just boil this down very, very simplistically. Maybe I'll just give you a couple of examples, right? I'm not going to sit here and speculate on where rates are headed. But I think it's fair to say that we are maybe at a high water mark in terms of where the rate environment is. Zack and his team is out there in the market, customers are -- and in general, agriculture and farmers like longer-term fixed rate loans, and that is an inherent advantage for us. That's why we've created. You heard about all of that. Well, look, okay, if a borrower says, I want a 7% loan, let's just say, hypothetically for a period of 25 years or 30 years. Yes, sure, no problem. We can fund that. Let's just say we go ahead and we match fund that. We lock in that 100 basis point spread that you saw in our Farm & Ranch portfolio, and we did that through bullets. We could lock that in at issuing an equivalent matched paper at 6%, we could get that 1%. Now you're going to turn around and tell me, well, what happens when the Fed starts cutting rates and the yield curve starts to steepen, and that same borrower comes in and says, the market rate now is 5%. Well, theoretically, we could be losing 1 percentage, right, on that loan and we'd be underwater, and our profitability and our margins wouldn't be as consistent. Well, what we do is we fund our entire portfolio, not just with bullets, but we fund them with callable instruments. And as a GSE -- and we were talking about this earlier in the break, Farmer Mac, along with other GSEs, such as the FHLB, Fannie and Freddie, the Farm Credit Funding Corporation have the ability to issue callable debt. And this callable debt, unlike deposits, is contractual and it's callable by us, not by the holder of that paper. And that is a very, very important distinction, especially as we're entering what I would call a period of declining rates. So in this particular example, that 7% paper would not be funded with a 5.5% bullet, which could be cheaper. We would elect to fund it perhaps with a 6% callable, stay up a little bit, right? Take down our margins a tiny bit because we do anticipate that rates are going to come down and that borrower -- and we would encourage that borrower. We want to retain that borrower. We want to offer low-cost financing to that borrower. That's central to our mission. Encourage that borrower when rates come down to 5% to refinance and to refinance with us. We'll call that instrument, and then that allows us to maintain that margin of 99 basis points because now we can issue -- reissue debt against that original paper, that's now yielding 5%, perhaps at 4%, right? And now we've locked in that 99 basis points. That is how we do this. And that's one example of our disciplined approach to asset liability management. We are not trying to fund this with cheaper bullets and pick up that extra 50 basis points and find ourselves, frankly, upside down in terms of profitability when the rate environment turns on us. So that's a big distinction between us. The second strategy, and we can probably save this for Q&A if you're interested. It gets very technical. We do enter swaps -- and swap transactions. We have the ability -- Zack talked about, different product structures. You talk about renewable energy and project finance deals at different points on the curve. We can take a fixed rate asset and we can synthetically convert that into a floating rate asset and fund it with floating-rate debt. And that's called maturity transformation. And that's a strategy that we can really employ, which allows us to widen our margins a little bit, we take on a very tiny amount of repricing risk. And I'm going to say that for a portfolio of this size and an entity of this size, we have little to no basis risk within our portfolio. And a lot of this is because we dynamically constantly are optimizing our portfolio on a daily basis. We have a very, very strong quantitative team that is doing this in conjunction with where markets are and where the competitive dynamics are in terms of the rate environment. Let me quickly pivot to securitization. And Brad talked about securitization. It was a big bubble on that growth opportunities chart, something that we're incredibly excited about. It's fundamental to our charter, fundamental to our mission. It's just a huge opportunity for Farmer Mac. It is in addition to a number of the things that we're able to do, and it's yielded a number of benefits for us. We've been in the market about 4x. We did our first pilot transaction just in 2021 -- in the fall of 2021 when the rate environment was at its absolute bottom, right? And now here we are just a few years later at the absolute peak. And during this period of time, we've been a consistent issuer of securitization, one transaction for a year since then. So you might ask why do you need to do securitization as a funding strategy when you have this incredible benefit as a GSE to fund on balance sheet? Well, there are a few reasons for this, right? We all lived through COVID, 2020. I joined Farmer Mac in January of 2020, and I remember Brad telling me, our debt is the lifeblood of Farmer Mac. It absolutely is. We don't take our GSE status for granted. I see a number of our board members here. And I think we had weekly calls about how are we financing and funding our balance sheet. How is liquidity, what are market disruptions. When Brad took the helm as CEO in 2018, the first thing he looked at, he said, look, there's a lot of opportunities for us to do a lot, and he went about hiring that. The other thing that struck him was fundamental to what charter is securitization, we should be securitizing and trying to diversify our portfolio of investors beyond just our debt investors. Our debt investors are very important to us, and they always will be. Financing our balance sheet through debt will always remain our main strategy. But we need a diversification strategy, and we need to bring in an alternative set of investors who cannot otherwise stop into the agricultural market, but for us. And so we went about structuring third-party securitizations. We've never done that before. And so we worked with large investment banks and we've just changed our investment bank recently. But through that journey, what we found was the appetite for American Agriculture is enormous. We were able to bring on institutional investors, hedge funds, private equities, et cetera, who came in and wanted to take down each and every one of the tranches that we offered in all 4 transactions. Our goal was to build the program out and we had to dole out 1 million, 2 million of our subordinated tranche that Brad described, which was about 23 million. So each of these securitizations have been about 300 million. The A tranche is about 92.5%. It's fully guaranteed by us for P&I. As you think about securitization, think about it in a few different ways, right? I talked about the diversification of our investor base. Well, that's one big benefit. The second benefit is a long-term source of financing. So when you look at that senior tranche of 92.5%, and that's right over there on that box, the senior guarantee tranche. Think of that as fairly comparable to our debt financing strategy, but now it gives us an ability when there's market disruptions, oftentimes, issuers cannot go beyond 3 years on the curve. The securitization, when they're funding something that's a long-term fixed rate loan allows us to go out much further than that. And so we can really withstand further market disruption. So that's one way for us to finance our balance sheet. The B tranche, in many ways, is a substitute for capital. We have tremendous capital benefits. Just yesterday, we've issued press releases around our preferred stock and redeeming preferred stock. Well, this is an excellent tool for us because as we deploy this very effectively, we can get a lot of capital relief because we are subject to some of the Basel regulations. And we can talk certainly about that a bit more off-line. So that's the second benefit that we see from securitization, financing capital relief and ability to bring on a different suite of investors. But the most exciting opportunity for us now that we've done this about 4x and something that we're really embarking on and Brad alluded to this, is securitization as a product, right? As we think about our total addressable market, as we think about the different partnership opportunities that have been created by our business development team, pool purchases that we've just started to dip the toe on. As you thread the needle across all of that and you think about this level that we've now created, this capability, this mouse trap, the securitization, you layer it on top of all of these other capabilities that we've built, it's going to be very, very powerful in terms of being an accelerant in growing our market share and our assets under management. And we can certainly talk about that more. Okay. So talked about the 4 transactions. I'll just highlight a couple of things, which I think are incredibly important because being a consistent issuer in the market for securitization is something that only Farmer Mac can do. And the reason for that is we are the only ones who can actually guarantee the P&I on the A tranche, and that's incredibly important to income investors. In terms of the B tranche investors, investors were willing to take on a little bit more risk. Without that guarantee, what they get is incredible consistency and diversification. Zack talked about our borrower base, our concentration across commodities, over 100 commodities, we can lend in all 50 states. We're the only ones who can do that because we're the only secondary market that can actually function as a GSE and offer credit nationwide. And we've really been able to capitalize on that, investors know that and every single one of our transactions, regardless of how volatile the market environment has been, and I think it's important to see this. 2021 to 2024, you all are watching markets very carefully, markets shut down, they open up. We have not seen any waning through that period in terms of our securitization transactions. We've often had to say no to investors who wanted to take down full tranches. Something that we've done, which is new, and it's really exciting. And again, it starts to showcase the benefits of securitization, not just in terms of financing for us, but certainly, in terms of growing our asset base is our ability to now tailor our securitization transactions to meet the cash flow needs of our customers and our borrowers. So if you're an insurance company, you want a wholesale financing product to meet and match your pension liability, then you might decide you want to take on an investment product that gives you an ability to match the duration of that long-term pension liability. So if you're a life insurance, insurance fund for example, you might go into something a little bit longer as we sliced and diced our cash flows. If you're a property and casualty insurance company, you might want to stay inwards of the curve. So securitization offers us a number of opportunities and benefits in terms of really changing and altering our mix of products, both on and off balance sheet. And this is something that we're continually testing the market with, and our most recent transaction had a slightly different flavor to it in the first 3 months. Okay. So what are the key takeaways as we think about just what the future holds for us. As a CFO, I can't let you all get away without talking about capital, right? And when you think about capital and you look at this chart, we were $815 million in terms of total capital, not so long ago in 2019. Today, we're at about $1.5 billion in terms of capital, right? I mean you can't have enough capital. You just can't have enough capital. But it's important to use that capital and to deploy that very efficiently and very effectively. Brad alluded to this in his comments, if you're an entity with a lot of capital, well, maybe your earnings are scrubbed off a little bit. Maybe you don't have the return on equity that you might have if you have just a ton of capital that you aren't putting to work. Well, that's not true for us, right? We have grown our capital such that we have, from a regulatory standpoint, over $550 million in terms of surplus. But we've done that while also diversifying our revenue streams, while also maintaining a liquidity profile, as I noted, of greater than 300 days, and we've grown our earnings 37% year-over-year. Our share price has actually grown tremendously over the last 5 years, 14% over a 10-year period, 200% since 2019. And we've done this and also rewarded our shareholders through dividend payouts. But we've been very responsible in terms of calibrating how much of a dividend payout we want to give back and how much we want to keep so that we can actually continue to grow and be profitable in these accretive lines of businesses that are also capital consumptive. I talked about credit and how we've had historically 2 basis points of credit growth. I think it's really important for us to go eyes wide open into all of this. And I'll just note, as we go into lines of businesses like telecom, like renewable energy, like corporate ag finance, we can't go into these lines of businesses that have bigger hole sizes, $15 million, $20 million, $25 million relative to Farm & Ranch loan of $1 million without a bank of capital that can really be there to not just be defensive should we have an unforeseen credit event, but we can also use that to take advantage of opportunities. If it's $191 syndicate, why do we have to be there only taking a small chunk. If we have a bigger capital base, maybe we can take a bigger slice of that. Gives us a tremendous amount of operating flexibility. And all of that means that we can actually grow our balance sheet and be that fulfill our mission. We have 3 sources of capital, core earnings and retained earnings. Our excellent credit profile has allowed us to continue to grow that bank of capital. That's contributed to that $1.5 billion. We've been very opportunistic in terms of how we tapped the preferred market. If you're looking at this 125 preferred Series G that we did in May of 2021, and if you think it's a typo of 4.875%, well, it's not a typo, that's really what we raised that. That's perpetual fixed rate capital. That's probably always going to stay on our books. Today, the Fed funds rate is north of 5%, and this is long-term fixed rate capital. That's been a big piece of why our earnings are what they are. But I think what's more interesting and more important is it's going to allow us to really diversify into these new lines of business and do that without really having to worry about what the credit markets hold for us in terms of funding. And finally, the third source of capital or capital relief for securitization that I noted as we sell the B tranche, we get capital relief from our balance sheet. I talked about the growth strategies that have resulted in AGM, our stock increasing by 200% since 2019, compare that to a 90% cumulative growth in the S&P 500. When you think about dividends -- okay, so for those of you who are interested in growth, that's what we have for you. If you're interested in dividends, I mean, we did very well last year. We increased our dividends. We used to increase our dividends by single digits. Last year, we grew 37%. We grew our dividends by 27%. If you look at our dividend yield coming off of a high water mark, we're at 3.1%. The average dividend for the S&P 500 is 1.4%. We've consecutively increased, as Brad said, our dividend payments for the last 13 years. I didn't spend a lot of time talking about just operating efficiency and being good stewards of our expenses. It's incredibly important to us. A metric -- another metric that I couldn't believe my eyes when I saw it, when I was looking at Farmer Mac financials when I was contemplating joining Farmer Mac, it was just the amount of core earnings. This is not EBITDA, this is not revenue. This is core earnings or net income per employee, clocks in at about $900,000 per employee after tax. And we do that because we pay very close attention to how we manage this book of business that's a little shy of $30 billion. We can do that with an operating efficiency ratio of less than 30%. That's incredibly important for us because we have 185 talented employees managing $28 billion in assets, unheard of when you think about that, when you think about a banking structure. When you think about return on book value or return on common equity, we conservatively [ banded ] it at 14%. But if you look at this chart, and you can see 2019 through to 2023, we've been in the 17% to 19% range, and we expect to stay right there. But our hurdle rate is about 14%. And again, 90% of our net effective spread, our revenues comes from our disciplined ALM management strategies, and that enables us to continue to grow our capital and that consistent dividend growth. So let me just end right where Brad began, right? Why invest in Farmer Mac? Well, why not? We're uniquely positioned. We're the only publicly traded government-sponsored enterprise, right? We have a focus on mission. And I really think what's good for the heart is good for the wallet, what's good for mission is good for profitability. And we've really proven that. I want to reemphasize the fact that we make no trade-offs. We can be well capitalized. We can grow. We can be responsible with our credit. We can have liquidity that's greater than 300 days so that we can weather a lot of market disruptions. Our asset liability management, strategy, when we just recently did a stress test around our asset liability management. Here we are at the peak of a rate environment. If rates go down 200 basis points or 300 basis points, well, guess how much our profitability moves. It moves to the up, but it moves by about 1% to 2%. If rates were to go up 100, 200, 300 basis points, yes, we may scrub off maybe 0.5 percentage point in terms of our net effective spread, everything else remaining equal. So extremely consistent, extremely resilient. So all good reasons to invest in us. Focused on growth. We talked about that. New lines of businesses, incredible tailwinds in terms of just demand in the electric sector, renewable energy, telecom, et cetera, and we're continuing to deploy and make a lot of head count investments there. And frankly, we have shown you consistent performance, and we've rewarded our shareholders not just through consistent growth, but through this commitment to being very careful and calibrated as we think about our dividend payment. So with that, let me just stop there, and I'll turn it back to you, Brad.

Well, thanks, Aparna. That was terrific. At the beginning of my comments earlier today, I've made a couple of pretty strong claims. The first was that in terms of total shareholder return over the last 1, 3, 5 years, we've been top decile. Actually, if you look at the New York Stock Exchange Financial 79 in the index, one of the very, very few financials that has exceeded our total shareholder return over this time period is Blackstone. Blackstone currently trades at 4x the P/E ratio of Farmer Mac. I claimed that we did it with about 1/4 of the earnings volatility of the index, as measured by standard deviation over that period of time. And I hope through what you've seen in charts but also explanation of our disciplined approach to how we manage spread at Farmer Mac, you understand why that is and why that's very likely to continue into the future. And for me, as CEO, the most audacious claim that I hope we have illustrated in some ways for you today is that you can take a very talented team of executives in a very motivated, mission-driven, committed team of employees who are at Farmer Mac because they believe in what we're doing because they have specialized expertise in operations and finance and agriculture in all of our sectors. You can take those people and get them moving in the same direction under very, very clear objectives, and you can deliver. You can execute and deliver. And I just don't see any reason why that shouldn't continue into the future. So we're going to move into a Q&A period right now. I'm going to bring back up to the front, I think we get nice high stools. Zack and Marc and Aparna. And Jalpa is going to be very busy because she has to work to handle mics that are going to be in the room, but also she's got people online who are going to be lobbying in questions, and she'll figure out how to balance and prioritize those to the extent that there are questions. But we really want to just take the time we have left, and we'll try to break the formal Q&A in about 20 minutes at about 12:30 today, so you can get on your day or linger with us afterwards and have informal conversations. We have actually more directors who have now joined us. But we'll try to -- to the extent there are questions, we'll try to -- Todd, I didn't mention you. Thank you. We'll try to get to the questions we have. Hopefully, there are some. And further clarify for you, what does Farmer Mac is all about why this business model is so powerful?

Probably, if you're forecasting that you're going to grow your book by 7% to 9%, I just compounded the numbers. So let's say the $28 billion goes to something -- it goes up by around 50% in a 5-year period. And I'm assuming that's roughly $45 billion. And I'm assuming the margins -- the spreads get to -- they get richer. I'm assuming they get richer. How much richer could they get? And what does that bring down to sort of -- how much more expense structure do you need to get there? So what type of -- I hate to ask the question, but what type of earnings power would you envision that realizing in the 5-year time frame?

No, that's a great question. I mean we have told you that kind of base case yes, 7% to 9%. That's kind of base case with...

Okay. If you take 8%, Brad, and just compounded...

Yes. So you think about how we manage it. Aparna didn't spend a lot of time on operating efficiency. But if we're disciplined in how we manage NES, recognizing that a little bit of a headwind is that as interest rates come down, that treasury earnings comes down a little bit. But as we grow further, the diversification of our business into more accretive lines tends to be an offset to that. And if you consider that, you consider management to an operating efficiency of about 30% where we have been, and you consider maintenance of capital at about the levels we have on a per asset basis, everything should kind of move proportionately. I'll turn to Aparna to see if she wants to be bolder and make a projection about how those relationships that break in the future towards greater efficiency or not, but it should move together.

Yes. I mean the only thing I'll add is, if you think about our efficiency ratio, we keep signaling that we want to be 30% or lower. And we often surprise ourselves thinking in a particular quarter, we could be over 30%. But we do a pretty good job of managing our pace of expenses. We keep a real close eye on that. But a large part of that has to do with the fact that we also surpass our own revenue expectations, right? And so when you look at that and you look at sort of the pace of growth in terms of volume, we've been at about 25% to 27% in terms of operating efficiencies. We've got some opportunities now as we think about just our capital management streams and being much more disciplined in terms of how much capital we want to raise given that we've got new levels of capital. I would actually try to be a little bit bolder, Brad, and say that I think it's not just on top line, but I think in terms of our net effective spread, but our core earnings as well. We set ourselves up for a little bit of an accelerate.

So the earnings should grow faster than that?

Yes. I don't think it will be linear. I think you'll see a little bit of an exponential. I'm not going to say it's not going to be quite a hockey stick, but you're going to see a little bit of a nonlinear to the positive.

It's really a one last question, we have to leave, so I apologize. How does the government screw this thing up?

A couple of points I'd like to make before turning it to Todd is that you say, oh, we have 5 presidential appointees in the boardroom. They have never arrived with an agenda, ever. I've never had a call from Capitol Hill. Could you do this, ever. This is very different than Fannie and Freddie of 25 years ago. But Todd, maybe you can help, kind of elaborate on that and legislatively in other ways, what could screw it up?

Look, I think the one thing that I'd say about Washington is agricultural policy has got a unique place in Congress. It's not partisan, it's regional. And with that, there's a tremendous amount of support, whether it's house Senate, dems, Republicans for agricultural policy. And so uniquely, what I was mentioning about a Farm Bill is it happens on a 5-year cadence in a 5-year cycle. Now granted this current Farm Bill is extended by 1 year, the Congress is in the process of doing that. It's one of the few pieces of legislation outside of appropriations that is done on that type of cycle. So there's just a tremendous amount of support for agriculture. And I think that's the piece I'd leave you with. I mean, of course -- and I would say that Congress has gotten the key things done that it needs to get done. I mean if you think about the debt ceiling bill, they got it done. Appropriations, got done. It might take a little bit longer than it traditionally has, and it's getting a little bit more difficult to do those things, but Congress is focused on delivering. And so I'd say in terms of a Farm Bill, my expectation is because of the support for American Agriculture that you'll see a Farm Bill.

I think Bose had a question.